6 - probability
Probability is one the mathematical theories which finds enormous usage in normal world.
When you meet your colleague in a mall on a holiday by chance, it could be a rare event of low probability.
When we go for a planned medical procedure, we ask the doctor how much risk is involved in it. Depending on the answer, we go for it immediately or postpone a bit .
We inherit many traits from our parents. Every human being has 23 pairs(46) of chromosomes. Out of 23 pair of chromosomes of mother, we get 23 (one from every pair);Out of 23 pair of our father we inherit 23.Which one we get from the pair ? Two of them are having equal probability to be inherited.So probability comes into picture when we talk about genetic aspects like your ear appearance (genetics) or hereditary diseases.
Quantum mechanics,following uncertainty principle, describes particles position and speed based on probabilistic wave function.This theory, got rejected wrongly by Einstein as he said 'God doesn't play dice'.
In financial sectors, we have banks, which run on the principle of, probability of all people withdrawing money at same time is quite low.
There is Gompertz-makeham law of mortality, which gives probability of death for each age for human beings.Insurance sector needs such models , to arrive at correct premium rates.Actuaries are employed by insurance companies to deal with models and arrive at optimal pricing for insurance products.
Risky assets are valued using probability based models. There are models that say stock returns are normally distributed ,and stock prices are log normally distributed.Value at Risk calculation has assumptions on underlying probability distribution.
Before winding up, have a look at Montey Hall ,one interesting probability based puzzles .
When you meet your colleague in a mall on a holiday by chance, it could be a rare event of low probability.
When we go for a planned medical procedure, we ask the doctor how much risk is involved in it. Depending on the answer, we go for it immediately or postpone a bit .
We inherit many traits from our parents. Every human being has 23 pairs(46) of chromosomes. Out of 23 pair of chromosomes of mother, we get 23 (one from every pair);Out of 23 pair of our father we inherit 23.Which one we get from the pair ? Two of them are having equal probability to be inherited.So probability comes into picture when we talk about genetic aspects like your ear appearance (genetics) or hereditary diseases.
Quantum mechanics,following uncertainty principle, describes particles position and speed based on probabilistic wave function.This theory, got rejected wrongly by Einstein as he said 'God doesn't play dice'.
In financial sectors, we have banks, which run on the principle of, probability of all people withdrawing money at same time is quite low.
There is Gompertz-makeham law of mortality, which gives probability of death for each age for human beings.Insurance sector needs such models , to arrive at correct premium rates.Actuaries are employed by insurance companies to deal with models and arrive at optimal pricing for insurance products.
Risky assets are valued using probability based models. There are models that say stock returns are normally distributed ,and stock prices are log normally distributed.Value at Risk calculation has assumptions on underlying probability distribution.
Before winding up, have a look at Montey Hall ,one interesting probability based puzzles .
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